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During any insolvency process, when company assets are realised there is a specific order in which creditors must be paid by law once the Insolvency Practitioners fees are taken. The Insolvency Practitioners terms for taking fees are predetermined when they are initially appointed.

The first creditor that will receive payment is the secured creditors (fixed charge). Secured creditors have the money that they are owed secured against an asset of the company, usually the asset that they have sold the company. For examples, if a company bought a piece of machinery that they would pay for over a 12 month period, the seller could secure the debt against the machinery which would give them the right to take back the machinery if repayments weren't upheld. Another example of a secured creditor would be a mortgage lender who has security against a property

Once these are paid, preferential creditors would be next on the agenda to be paid. Preferential creditors are usually internal and consist of things such as staff wages and holiday pay claims. Before September 2003, the Inland Revenue (now HMRC) were also classed as a Preferential Creditor, they are now considered an Unsecured Creditor.

Next to receive payment would by any creditors who hold a floating charge. These occur when a debt is secured against general rather than specific assets of the company. A common example would be an overdraft where the bank has a floating charge over assets such as debtors, stock or office furniture. Floating charge assets are assets that the company would use day to day thus making it vary in value over time.

Unsecured creditors are the last external creditors to be paid. These are usually unpaid trade creditors along with any unpaid taxes (PAYE, VAT etc.) and any unsecured loans.

The shareholders are the final creditors that will be paid. Apart from in a Members Voluntary Liquidation, it is rare for the shareholders to receive anything as this would indicate that the Company was solvent on a balance sheet basis.